According to the National Debt Hotline, a third of Aussies believe that they will always be in debt, while in a survey by News.com, 30% of respondents claimed that they were struggling with debt to the point that they may carry it for the rest of their lives. This can be for so many reasons, for starters the high cost of living in Australia, all the way down to the fact that we are now contacted fed ads on every single platform that it can be harder to curb our spending. Here are some tips to help you break up with bad money habits, from Gerry Incollingo, the MD of LCI Partners. It is a firm that specializes in accounting advisory, lending, wealth, property, insurance, and legal.
Three Ways You Can Break Up with Bad Money Habits
1) Budget, so that you can shop guilt-free
There are so many ways that you can set up your budget, but if you are new to budgeting, consider the 50/30/20 rule. That is that 50% of your wage after the tax goes towards essentials, such as rent or mortgage, utilities, electricity, internet, essential groceries, and the items that you need. 30% goes towards entertainment and wants, and 20% goes towards savings or paying on the debt. This is a great tip for stopping bad money habits.
If you are someone who spends a fair bit when you want to spend, I recommend holding onto the 30% spending money for a few weeks until you grow it a bit to save you going too far and ending up putting all the extras on your credit card. That is what we are trying to avoid and having a lot of credit card debt is a bad habit to get into. Additionally, if you are paying off debt that’s one thing, but if you are saving, move that money into a new account that you don’t see every day. As they say, “out of sight out of mind”, so move it into an account that you ideally can’t easily see so you won’t be tempted to spend it.
2) Delete any apps the encourage you to spend unnecessarily
If Uber Eats, Amazon, or any other app keeps sending you notifications, encouraging you to spend when you don’t need to, delete them. You don’t need that temptation when you are sitting in your living room with no intention of shopping. Impulse shopping is one of the worst money habits to try to limit the temptation by deleting anything that will get in the way. AfterPay is also not a great idea if you already have debt. I would avoid using services like that and instead would save for what you want to purchase and buy it with savings over anything else.
3) Save up for your bills in advance
As mentioned in the first tip, you want to get on top of your essential expenses. You don’t want to get in the habit of paying your electricity bill on credit for example as that is how you will rack up a debt that will be hard to get out of. Before you go shopping or buy unessential items, save in advance for the expenses that you know are coming up. If you can have at least a month or two in advance saved for those expenses that are ideal and going further to have a rainy day fund is even better. The more you have saved up for those essential items, the less you will have to worry about spending on the fun items.